Connectivity

How smart is your warehouse? Six ways IoT connectivity can raise your retail game and drive sales

We’ve all seen them – the hyper-connected smart warehouses packed with robots which have been pioneered by the likes of Amazon and Ocado. Now conventional brick-and-mortar retailers are increasingly investing their warehouse budgets in Internet of Things (IoT) solutions in a bid to drive revenues. Last year alone UK retailers spent more than £1bn on warehouse automation. That spend is predicted to rise 11% year-on-year at least until 2025.

John Lewis is a prime example of a UK retailer betting big on IoT warehouse connectivity. The high street retail giant is continuing to develop a two-million-square-foot distribution centre in Milton Keynes where omnichannel orders from multiple departments are picked and packed autonomously. In practice this means John Lewis can combine clothing, homeware and electricals in one customer shipment, saving time, money and reducing the environmental impact of delivery.

Retailers now need to install the digital network infrastructure necessary to unlock the benefits of smart warehouses. Here are six ways that IoT warehouse connectivity will help you raise your retail game and drive revenue:

IoT will help you get omnichannel match fit

Modern omnichannel customers have incredibly high expectations. They take it for granted the products advertised in-store and online are immediately available and they want their order fulfilled through the most convenient channels and with the absolute minimum of delay.

This has long been a stumbling block for brick-and-mortar retailers looking to sell online, but smart tag solutions now provide an answer. IoT warehouse technology such as RFID gives the retailer a highly accurate real-time view of the number and location of SKUs they have in stock across their estate. This means both the retailer and customer can be confident that displayed stock levels are accurate. The retailer can locate SKUs immediately and fulfil orders in a fraction of the time.

Fashion retailer River Island is just one of many stores that attach RFID tags to all of their stock. Prior to RFID, River Island was achieving a stock accuracy level of around 70%, but this is now as high as 98%. Meanwhile Marks and Spencer has reported a 5.5% increase in sales following its adoption of RFID.

RFID tags can store considerably larger data volumes than barcodes. This includes SKU size, manufacturer, expiration date, serial number, production line, and so on. An average RFID reader also has a higher speed than a barcode reader and can scan up to 200 tags at once.

Accurate IoT fulfilment opens up a world of alternative omnichannel distribution models – potentially turning any store or warehouse into a distribution hub or converting uneconomical retail outlets into so-called ‘dark store’ mini fulfilment centres.

IoT boosts warehouse productivity

Warehouse management systems (WMS) are widely used by retailers to monitor inventory-related activities, but most are driven by ERP systems which rely on time-consuming, labour-intensive and error-prone processes. When IoT devices are integrated into a WMS however, they take warehouse management to the next level. That’s because smart warehouse solutions are designed to monitor inventory, gather data and generate tasks accurately, autonomously and fast.

Warehouse data is accurately harvested, processed and analysed within seconds before a condensed inventory (or other warehouse-related data) is shared with the end-user via a user-friendly dashboard.

This warehouse data can be used alongside real-time customer orders to automate and streamline warehouse tasking and workforce allocation. Various workforce management systems use artificial intelligence to calculate the most efficient way of picking orders and they then task employees via smartwatches, mobile phones and tablets. Employee performance can also be monitored and incentivised to ensure the best results.

Get to grips with perishable stock damage and waste

The UN Food and Agriculture Organization states that one-third of all foods perish in transit as supply chain managers fail to create proper storage conditions during transportation and delivery. That’s bad news for retailer profits and bad news for the planet.

IoT systems for warehouses and transportation can track and automatically adjust the temperature, atmospheric pressure, moisture, and other properties that could jeopardize the integrity of transported goods. They can also accurately monitor sell-by dates and ensure the right stock hits the shop floor at the best possible moment, protecting profits and increasing customer satisfaction.

Ensure warehouse business continuity with predictive maintenance

Modern warehouses rely on a complex array of systems to ensure the best storage conditions for stock, as well as a safe and productive working environment for employees. These systems include refrigeration units, lighting and heating, ventilation and air conditioning (HVAC) to name but a few.

These systems can quickly waste money if they’re not managed properly and they can even halt operations if they fail. When warehouse hardware is equipped with IoT smart sensors however, the data can be used to instantly detect failures or performance issues. Artificial intelligence can also interrogate this data and predict when equipment failure is likely to happen, so that pre-emptive maintenance can prevent unnecessary expense and unplanned downtime.

Take full control of your supply and distribution chains

A warehouse capable of tracking stock levels in real time right down to individual SKUs gives retailers a powerful opportunity to reimagine their supply chains.

For a start, high-confidence IoT-generated data means retailers can switch to a lean supply chain model, reducing their on-premise stock levels and significantly cutting costs. It also means that retailers can switch to a demand-driven, customer-centric supply model more easily – stocking what they sell, rather than attempting to sell what they stock.

This achieved by monitoring customers’ buying signals the length of their path to purchase and translating these signals in real time to warehouse actions. This could mean, for example, ordering more stock from suppliers, fulfilling orders faster, locating SKUs across the retailers estate to name but a few.

IoT-generated warehouse data also enables retailers to keep a closer eye on supplier performance and identify potential supply chain bottlenecks before they escalate. For instance, this can be achieved by monitoring and collecting data on late and incorrect deliveries so they can be raised with a supplier in a timely manner.

Pioneer innovative retail models with the help of IoT

Granular IoT-generated warehouse data can enable retailers to become significantly more innovative with their inventories and assortments. For example greater IoT-driven fulfilment speed and agility in the warehouse makes it possible to support in-season capsule collections in fashion retail, pop-up stores which may only trade for a month or two and stores which change their inventory on a regular basis. Nike’s LA concept store is one such example. It’s store assortment changes every two weeks and is based on local NikePlus members’ online browsing and purchasing behaviour.

Contact VCG to find out if your digital networks are robust and secure enough to support IoT devices and deliver the benefits of a smart warehouse. Connecting to cloud solutions does increase cybersecurity risk, but VCG provides the additional protection your network needs. We also offer solutions to ensure your brand is fully connected and your network is scalable, flexible and can be fully managed with 24/7 service and technical support. Get in touch to find out how we can help your business grow.